Warren Buffett "Most People Shouldn't Pick Individual Stocks"

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Taylor Larimore
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Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by Taylor Larimore » Fri May 22, 2020 1:15 pm

Bogleheads:

In today's article, Warren Buffett expresses his opinion that most investors should not own individual stocks:

Most People Shouldn't Pick Individual Stocks

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Attempting to build an investment program around a handful of individual securities is, for all but the most exceptional investors, a fool's errand."
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by steve321 » Fri May 22, 2020 1:39 pm

Yes but if you get it right you hit the jackpot 8-) When I wrote this
viewtopic.php?f=1&t=258102
I put quite a bit of money in those 2 stocks. I am pretty happy with that decision 8-) They did much better than my ETFs
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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by Crushtheturtle » Fri May 22, 2020 1:39 pm

Will the world ever again know an investor as wise and insightful as Mr. Buffett?

He knows that the common man can't hope to match his intellect and abilities, and so shouldn't try.

Thank you for sharing your opinion once again, Mr. Buffett!
“The mass of men lead lives of quiet desperation.” - Henry David Thoreau

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by Vanguard Fan 1367 » Fri May 22, 2020 1:46 pm

I used to not feel that way. In our current Boglehead contest I put down my 3 biggest holdings. I am something like 61 out of 72 entries.

I took advantage of tax loss harvesting this March to totally get rid of my individual stocks. Stock picking is not my thing.
Upton Sinclair: "It is difficult to get a man to understand something when his salary depends on his not understanding it."

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by IndexCore » Fri May 22, 2020 1:50 pm

For those already stock picking, measure yourself against the S&P 500. Consider your choice of time spent stock picking, the emotional effort and discipline, and compare that against simply buying the S&P 500 and not worrying. Also consider if your stock picks are as diverse as the S&P 500 - try to pick from different industries, to mitigate some of the risk of stock picking. Even for those going the stock picking route, index funds offer some valuable guidance.

(I say that as someone who was a passive index fund investor for decades until March 2020, and then picked dozens of individual stocks across different industries for a fraction of my portfolio. I look forward to the time after COVID-19 my picks either skyrocket or go bankrupt, and let me return to passive index investing again).

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by steve321 » Fri May 22, 2020 1:54 pm

IndexCore wrote:
Fri May 22, 2020 1:50 pm
For those already stock picking, measure yourself against the S&P 500. Consider your choice of time spent stock picking, the emotional effort and discipline, and compare that against simply buying the S&P 500 and not worrying.
Took me 30 minute to make that winning choice here:
viewtopic.php?f=1&t=258102
Success does not bring happiness. In fact, happiness IS success. | 'There are only two tragedies in life: one is not getting what one wants, and the other is getting it.' Oscar Wilde

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by Hector » Fri May 22, 2020 2:03 pm

steve321 wrote:
Fri May 22, 2020 1:39 pm
Yes but if you get it right you hit the jackpot 8-) When I wrote this
viewtopic.php?f=1&t=258102
I put quite a bit of money in those 2 stocks. I am pretty happy with that decision 8-) They did much better than my ETFs
:sharebeer

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by Triple digit golfer » Fri May 22, 2020 2:03 pm

Stock picking is incredibly difficult. Once you realize that stock prices are forward looking, it clicks. I work with people who still and always will have the attitude of "this company is solid, their stock will perform well." Everyone else knows the company is solid, too, and will thus pay for that "solidity."

If it were as simple as just buying stocks for companies that are expected to do well, we'd all be retired multimillionaires.

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by steve321 » Fri May 22, 2020 2:07 pm

Triple digit golfer wrote:
Fri May 22, 2020 2:03 pm
Stock picking is incredibly difficult. Once you realize that stock prices are forward looking, it clicks. I work with people who still and always will have the attitude of "this company is solid, their stock will perform well." Everyone else knows the company is solid, too, and will thus pay for that "solidity."

If it were as simple as just buying stocks for companies that are expected to do well, we'd all be retired multimillionaires.
With due respect those 2 companies were solid and I did quite well investing in them in this basis :moneybag 8-)
viewtopic.php?f=1&t=258102
Success does not bring happiness. In fact, happiness IS success. | 'There are only two tragedies in life: one is not getting what one wants, and the other is getting it.' Oscar Wilde

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by Triple digit golfer » Fri May 22, 2020 2:12 pm

steve321 wrote:
Fri May 22, 2020 2:07 pm
Triple digit golfer wrote:
Fri May 22, 2020 2:03 pm
Stock picking is incredibly difficult. Once you realize that stock prices are forward looking, it clicks. I work with people who still and always will have the attitude of "this company is solid, their stock will perform well." Everyone else knows the company is solid, too, and will thus pay for that "solidity."

If it were as simple as just buying stocks for companies that are expected to do well, we'd all be retired multimillionaires.
With due respect those 2 companies were solid and I did quite well investing in them in this basis :moneybag 8-)
viewtopic.php?f=1&t=258102
So what?

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by steve321 » Fri May 22, 2020 2:17 pm

Triple digit golfer wrote:
Fri May 22, 2020 2:12 pm
steve321 wrote:
Fri May 22, 2020 2:07 pm
Triple digit golfer wrote:
Fri May 22, 2020 2:03 pm
Stock picking is incredibly difficult. Once you realize that stock prices are forward looking, it clicks. I work with people who still and always will have the attitude of "this company is solid, their stock will perform well." Everyone else knows the company is solid, too, and will thus pay for that "solidity."

If it were as simple as just buying stocks for companies that are expected to do well, we'd all be retired multimillionaires.
With due respect those 2 companies were solid and I did quite well investing in them in this basis :moneybag 8-)
viewtopic.php?f=1&t=258102
So what?
It's worked for me in practice :D
Success does not bring happiness. In fact, happiness IS success. | 'There are only two tragedies in life: one is not getting what one wants, and the other is getting it.' Oscar Wilde

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by happyisland » Fri May 22, 2020 2:47 pm

steve321 wrote:
Fri May 22, 2020 2:17 pm
Triple digit golfer wrote:
Fri May 22, 2020 2:12 pm
steve321 wrote:
Fri May 22, 2020 2:07 pm
Triple digit golfer wrote:
Fri May 22, 2020 2:03 pm
Stock picking is incredibly difficult. Once you realize that stock prices are forward looking, it clicks. I work with people who still and always will have the attitude of "this company is solid, their stock will perform well." Everyone else knows the company is solid, too, and will thus pay for that "solidity."

If it were as simple as just buying stocks for companies that are expected to do well, we'd all be retired multimillionaires.
With due respect those 2 companies were solid and I did quite well investing in them in this basis :moneybag 8-)
viewtopic.php?f=1&t=258102
So what?
It's worked for me in practice :D
Back in the dark days when I was a stock picker I had some occasional winners too. If you can do this reliably you should be running a hedge fund. If you're a mere mortal then maybe you just got lucky.

Have you ever invested in individual stocks that didn't pan out?

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by steve321 » Fri May 22, 2020 2:53 pm

happyisland wrote:
Fri May 22, 2020 2:47 pm
steve321 wrote:
Fri May 22, 2020 2:17 pm
Triple digit golfer wrote:
Fri May 22, 2020 2:12 pm
steve321 wrote:
Fri May 22, 2020 2:07 pm
Triple digit golfer wrote:
Fri May 22, 2020 2:03 pm
Stock picking is incredibly difficult. Once you realize that stock prices are forward looking, it clicks. I work with people who still and always will have the attitude of "this company is solid, their stock will perform well." Everyone else knows the company is solid, too, and will thus pay for that "solidity."

If it were as simple as just buying stocks for companies that are expected to do well, we'd all be retired multimillionaires.
With due respect those 2 companies were solid and I did quite well investing in them in this basis :moneybag 8-)
viewtopic.php?f=1&t=258102
So what?
It's worked for me in practice :D
Back in the dark days when I was a stock picker I had some occasional winners too. If you can do this reliably you should be running a hedge fund. If you're a mere mortal then maybe you just got lucky.

Have you ever invested in individual stocks that didn't pan out?
No I only invested in those 2. 8-) I used to invest in real estate before.
Success does not bring happiness. In fact, happiness IS success. | 'There are only two tragedies in life: one is not getting what one wants, and the other is getting it.' Oscar Wilde

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by steve321 » Fri May 22, 2020 2:55 pm

steve321 wrote:
Fri May 22, 2020 2:53 pm
happyisland wrote:
Fri May 22, 2020 2:47 pm
steve321 wrote:
Fri May 22, 2020 2:17 pm
Triple digit golfer wrote:
Fri May 22, 2020 2:12 pm
steve321 wrote:
Fri May 22, 2020 2:07 pm


With due respect those 2 companies were solid and I did quite well investing in them in this basis :moneybag 8-)
viewtopic.php?f=1&t=258102
So what?
It's worked for me in practice :D
Back in the dark days when I was a stock picker I had some occasional winners too. If you can do this reliably you should be running a hedge fund. If you're a mere mortal then maybe you just got lucky.

Have you ever invested in individual stocks that didn't pan out?
No I only invested in those 2. 8-) I used to invest in real estate before. I could buy several flats in a given area for 1M or more, so why not invest 1M in Amazon's stock? It looked diversified enough for me. :D
Success does not bring happiness. In fact, happiness IS success. | 'There are only two tragedies in life: one is not getting what one wants, and the other is getting it.' Oscar Wilde

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by SteadyOne » Fri May 22, 2020 3:49 pm

steve321 wrote:
Fri May 22, 2020 2:53 pm
happyisland wrote:
Fri May 22, 2020 2:47 pm
steve321 wrote:
Fri May 22, 2020 2:17 pm
Triple digit golfer wrote:
Fri May 22, 2020 2:12 pm
steve321 wrote:
Fri May 22, 2020 2:07 pm


With due respect those 2 companies were solid and I did quite well investing in them in this basis :moneybag 8-)
viewtopic.php?f=1&t=258102
So what?
It's worked for me in practice :D
Back in the dark days when I was a stock picker I had some occasional winners too. If you can do this reliably you should be running a hedge fund. If you're a mere mortal then maybe you just got lucky.

Have you ever invested in individual stocks that didn't pan out?
No I only invested in those 2. 8-) I used to invest in real estate before.
Good for you. Any pointers for now? What stock should we buy today?
“Every de­duc­tion is al­lowed as a mat­ter of leg­isla­tive grace.” US Federal Court

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by Rosencrantz1 » Fri May 22, 2020 5:31 pm

Crushtheturtle wrote:
Fri May 22, 2020 1:39 pm
Will the world ever again know an investor as wise and insightful as Mr. Buffett?

He knows that the common man can't hope to match his intellect and abilities, and so shouldn't try.

Thank you for sharing your opinion once again, Mr. Buffett!
I have nothing but the utmost respect for Mr Buffett - but, even Warren Buffett has made some bad choices of late - - buying airlines (and then dumping at the lows), WAY overpaying for KraftHeinz, and Occidental petroleum.

I think (but do not know) that Buffett has actually underperformed the sp500 for the last decade. Of course, he outperformed it for many, many years prior to that :)

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by Ferdinand2014 » Fri May 22, 2020 6:47 pm

Excellent advice. I follow it myself and am very, very happy. Thank you Taylor. Than you for your service and have a good Memorial Day weekend.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by Whitefalcon » Fri May 22, 2020 8:13 pm

steve321 wrote:
Fri May 22, 2020 2:07 pm
Triple digit golfer wrote:
Fri May 22, 2020 2:03 pm
Stock picking is incredibly difficult. Once you realize that stock prices are forward looking, it clicks. I work with people who still and always will have the attitude of "this company is solid, their stock will perform well." Everyone else knows the company is solid, too, and will thus pay for that "solidity."

If it were as simple as just buying stocks for companies that are expected to do well, we'd all be retired multimillionaires.
With due respect those 2 companies were solid and I did quite well investing in them in this basis :moneybag 8-)
viewtopic.php?f=1&t=258102
Steve321;

I am truely glad you have done well in your investing decisions. However I am dont understand your point in responding to this post. Are you suggesting I disregard the investing wisdom of Buffett, Vanguard, Fidelity, Schwab, etc . and not invest my equity portion in index funds, but rather pick 2 or 3 stocks and expect good results for the future?

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by NerveDoc » Fri May 22, 2020 8:17 pm

Similar advice from David Swensen about stock picking: "It's basically a fool's errand. Think about these professionals who are devoting their careers to beating the market - have such a hard time beating the market. How can somebody who's casually spending, you know, a little bit of time on the weekends compete? They can't."

"Be invested in the stock market. Don't pick your own stocks. Don't pay somebody else to pick them for you."

https://www.npr.org/transcripts/676158680

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by venkman » Fri May 22, 2020 9:05 pm

Are we sure this isn't a trick by Buffett to get people to dump their shares of BRK, so he can buy them up on the cheap? :D

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by dru808 » Fri May 22, 2020 9:49 pm

steve321 wrote:
Fri May 22, 2020 2:53 pm
happyisland wrote:
Fri May 22, 2020 2:47 pm
steve321 wrote:
Fri May 22, 2020 2:17 pm
Triple digit golfer wrote:
Fri May 22, 2020 2:12 pm
steve321 wrote:
Fri May 22, 2020 2:07 pm


With due respect those 2 companies were solid and I did quite well investing in them in this basis :moneybag 8-)
viewtopic.php?f=1&t=258102
So what?
It's worked for me in practice :D
Back in the dark days when I was a stock picker I had some occasional winners too. If you can do this reliably you should be running a hedge fund. If you're a mere mortal then maybe you just got lucky.

Have you ever invested in individual stocks that didn't pan out?
No I only invested in those 2. 8-) I used to invest in real estate before.

Well you know what you’re doing, you’re one of the few buffet talks about, why not exit your index fund holdings and put the money into 2 holdings you know will outperform? Seems as if you’re leaving a lot of sure profit on the table.
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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by JoMoney » Fri May 22, 2020 10:16 pm

Absolutely.... It's simple math to show as a group "most people" can't be above average. The Dunning–Kruger effect just highlights how pervasive it is for people to believe it doesn't apply to them.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by 1789 » Fri May 22, 2020 10:22 pm

Taylor Larimore wrote:
Fri May 22, 2020 1:15 pm
Bogleheads:

In today's article, Warren Buffett expresses his opinion that most investors should not own individual stocks:

Most People Shouldn't Pick Individual Stocks

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Attempting to build an investment program around a handful of individual securities is, for all but the most exceptional investors, a fool's errand."
Hi Taylor.

Happy memorial day weekend to you and your family. I think it is incredibly difficult to convince people who thinks they got some talent in stock picking. Thank God i learned from you and other BHs that i should not even try this as most people tried and failed badly. I know that i am no better than you or Bogle or Buffet. But some people believe so. So its all their choice to do experiment and get the result for themselves.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by steve321 » Sat May 23, 2020 1:18 am

SteadyOne wrote:
Fri May 22, 2020 3:49 pm
steve321 wrote:
Fri May 22, 2020 2:53 pm
happyisland wrote:
Fri May 22, 2020 2:47 pm
steve321 wrote:
Fri May 22, 2020 2:17 pm
Triple digit golfer wrote:
Fri May 22, 2020 2:12 pm


So what?
It's worked for me in practice :D
Back in the dark days when I was a stock picker I had some occasional winners too. If you can do this reliably you should be running a hedge fund. If you're a mere mortal then maybe you just got lucky.

Have you ever invested in individual stocks that didn't pan out?
No I only invested in those 2. 8-) I used to invest in real estate before.
Good for you. Any pointers for now? What stock should we buy today?
Thank you for the question, I am flattered. :)
Honestly, I wouldn't want the responsibility of recommending stocks to others. What I do is I sit down to meditate (like Ray Dalio I practice TM) and in a process that Dalio has described well, when your mind relaxes your get ideas coming up to your conscious mind from your creative, subconscious part of the brain. So sometimes I have hunches in this way and act on them. Worked for me in making decision for real estate and lately for the stock market. I have greatly outperformed all benchmarks this way. :moneybag :moneybag :moneybag :moneybag But wouldn't want to make recommendations to others.
Next time I have a hunch I could post it here for debate, but it will be just for debate, not intended as a recommendation to others (don't like to feel any weight on my shoulders).
Success does not bring happiness. In fact, happiness IS success. | 'There are only two tragedies in life: one is not getting what one wants, and the other is getting it.' Oscar Wilde

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by steve321 » Sat May 23, 2020 1:20 am

Whitefalcon wrote:
Fri May 22, 2020 8:13 pm
steve321 wrote:
Fri May 22, 2020 2:07 pm
Triple digit golfer wrote:
Fri May 22, 2020 2:03 pm
Stock picking is incredibly difficult. Once you realize that stock prices are forward looking, it clicks. I work with people who still and always will have the attitude of "this company is solid, their stock will perform well." Everyone else knows the company is solid, too, and will thus pay for that "solidity."

If it were as simple as just buying stocks for companies that are expected to do well, we'd all be retired multimillionaires.
With due respect those 2 companies were solid and I did quite well investing in them in this basis :moneybag 8-)
viewtopic.php?f=1&t=258102
Steve321;

I am truely glad you have done well in your investing decisions. However I am dont understand your point in responding to this post. Are you suggesting I disregard the investing wisdom of Buffett, Vanguard, Fidelity, Schwab, etc . and not invest my equity portion in index funds, but rather pick 2 or 3 stocks and expect good results for the future?
Please don't disregard the investing wisdom of Buffett, Vanguard, Fidelity, Schwab, etc. See my post just above for more explanation.
Success does not bring happiness. In fact, happiness IS success. | 'There are only two tragedies in life: one is not getting what one wants, and the other is getting it.' Oscar Wilde

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by Uncorrelated » Sat May 23, 2020 3:22 am

steve321 wrote:
Fri May 22, 2020 1:39 pm
Yes but if you get it right you hit the jackpot 8-) When I wrote this
viewtopic.php?f=1&t=258102
I put quite a bit of money in those 2 stocks. I am pretty happy with that decision 8-) They did much better than my ETFs
Obligatory you cannot evaluate an investment decision based on it's outcome.

You can make money in a casino. Doesn't mean it's good idea to go there.

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by steve321 » Sat May 23, 2020 3:45 am

Uncorrelated wrote:
Sat May 23, 2020 3:22 am
steve321 wrote:
Fri May 22, 2020 1:39 pm
Yes but if you get it right you hit the jackpot 8-) When I wrote this
viewtopic.php?f=1&t=258102
I put quite a bit of money in those 2 stocks. I am pretty happy with that decision 8-) They did much better than my ETFs
Obligatory you cannot evaluate an investment decision based on it's outcome.

You can make money in a casino. Doesn't mean it's good idea to go there.
with due respect that's what people do here many times. I've seen plenty of posts by bogleheads extraordinaires like nisiprius or Mr Larimore the author of OP comparing outcomes of index funds or the 3 fund portfolio with other strategies!
Success does not bring happiness. In fact, happiness IS success. | 'There are only two tragedies in life: one is not getting what one wants, and the other is getting it.' Oscar Wilde

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by minimalistmarc » Sat May 23, 2020 5:12 am

steve321 wrote:
Fri May 22, 2020 2:07 pm
Triple digit golfer wrote:
Fri May 22, 2020 2:03 pm
Stock picking is incredibly difficult. Once you realize that stock prices are forward looking, it clicks. I work with people who still and always will have the attitude of "this company is solid, their stock will perform well." Everyone else knows the company is solid, too, and will thus pay for that "solidity."

If it were as simple as just buying stocks for companies that are expected to do well, we'd all be retired multimillionaires.
With due respect those 2 companies were solid and I did quite well investing in them in this basis :moneybag 8-)
viewtopic.php?f=1&t=258102
Well done but I find these anecdotes pointless without knowing how much was invested. When I had a small portfolio and knew nothing I often punted on individual stocks, some did very well, some did very badly. Now that I’m relatively wealthy, I don’t invest in anything I’m not confident enough to put at least 20k into, so I feel very comfortable just taking the market gains.

Stock picking can pay off short term but very rarely long term.

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by steve321 » Sat May 23, 2020 5:51 am

As I mentioned in that post it was roughly 1M in each stock. I used to invest in real estate and in the past I have bought several properties in the same street or area, for a total of over 1M total, which come to think of it was not a very diversified investment; so I figured that putting 1M in the stock of a big company like Amazon was more diversified than what I used to do with real estate and I did not worry that much.
Success does not bring happiness. In fact, happiness IS success. | 'There are only two tragedies in life: one is not getting what one wants, and the other is getting it.' Oscar Wilde

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by steve321 » Sat May 23, 2020 5:56 am

minimalistmarc wrote:
Sat May 23, 2020 5:12 am
steve321 wrote:
Fri May 22, 2020 2:07 pm
Triple digit golfer wrote:
Fri May 22, 2020 2:03 pm
Stock picking is incredibly difficult. Once you realize that stock prices are forward looking, it clicks. I work with people who still and always will have the attitude of "this company is solid, their stock will perform well." Everyone else knows the company is solid, too, and will thus pay for that "solidity."

If it were as simple as just buying stocks for companies that are expected to do well, we'd all be retired multimillionaires.
With due respect those 2 companies were solid and I did quite well investing in them in this basis :moneybag 8-)
viewtopic.php?f=1&t=258102
Well done but I find these anecdotes pointless without knowing how much was invested. When I had a small portfolio and knew nothing I often punted on individual stocks, some did very well, some did very badly. Now that I’m relatively wealthy, I don’t invest in anything I’m not confident enough to put at least 20k into, so I feel very comfortable just taking the market gains.

Stock picking can pay off short term but very rarely long term.
The important factor for me was good experience with these companies. Customer satisfaction. I had been using Amazon Fresh and loved it. I did not rely on hearsay or other people's judgement. For example a retired fund manager who has a massive mansion in Poole spoke to me favorably about Abcam at the time too. I didn't have any experience with Abcam so I didn't invest. Glad I didn't since that stock has gone nowhere since that time.
Success does not bring happiness. In fact, happiness IS success. | 'There are only two tragedies in life: one is not getting what one wants, and the other is getting it.' Oscar Wilde

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by bondsr4me » Sat May 23, 2020 7:40 am

I agree with Warren Buffett.
“Most” people shouldn’t buy individual stocks.
I see nothing wrong with using a small amount of a portfolio to buy stocks, but keep the majority of funds for index funds (ie: VOOG, VOO).
If you’re not willing/capable of doing the legwork to research a company, you shouldn’t be buying it in the first place.
I agree with indexing; it’s the easy way to invest.
But I also enjoy the financial markets and business enough to buy a few companies.
Investing is a highly personal endeavor. We are all different.
We have different levels of acceptance of risk.
You have to do what is comfortable for you; not Warren Buffett, not Jack Bogle, not any Boglehead...just yourself.
After all, it’s your money.
Have a great Holiday weekend; stay safe; be well.

statefan03
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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by statefan03 » Sat May 23, 2020 10:17 am

From the 1996 Shareholders meeting:

Diversification is protection against ignorance because if you want to make sure that nothing bad happens to you relative to the market, you own everything. There's nothing wrong with that, and it is a perfectly sound approach for someone who does not understand how to analyze businesses. If you know how to analyze businesses and value businesses, it's crazy to own 50 stocks or 40 stocks or 30 stocks, probably, because there aren't that many wonderful businesses that are understandable to a single human being, in all likelihood. And to have some super-wonderful business and then put money in number 30 or 35 on your list of attractiveness and forego putting more money into number one, just strikes Charlie and me as madness. "

https://www.youtube.com/watch?v=H3Q8a9imiFs

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tvubpwcisla
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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by tvubpwcisla » Sat May 23, 2020 10:26 am

Sometimes it's the inexperienced stock pickers that turn out to have the best investment returns because they don't overthink it. They are too dumb to know how to read a balance sheet and that is a good thing.

For example, Disney is a great company and I think they will make movies and entertain us for years to come. Who cares what their technicals look like or if the stock is trading near moving averages? The beginner simply buys and holds the stock their entire life collecting dividends and growth along the way. The experience professional bounces in and out based on earnings and other things ultimately not performing as well as the investor who doesn't know anything.

:moneybag
Stay invested my friends.

Carol88888
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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by Carol88888 » Sat May 23, 2020 11:28 am

It's incredibly difficult and time consuming to evaluate a single company and stay on top of its development. Now imagine doing that with a whole handful of companies.

Even if I could do it, I don't think I'd want to.

Long ago I decided that every decision I make is a chance to be wrong. Therefore, best to put together an investment plan that requires few decisions.

Fortune Seeker
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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by Fortune Seeker » Sat May 23, 2020 11:29 am

steve321 wrote:
Sat May 23, 2020 5:56 am
With due respect those 2 companies were solid and I did quite well investing in them in this basis :moneybag 8-)
viewtopic.php?f=1&t=258102
If you've invested in them in 2018 and outperformed S&P500 for 2 years that's great for you and congratulations!

EDIT: removed comment about amazon crashing in 2000s, since that was mentioned in that thread you linked.

There is very little chance to guess right what's going to outperform over 20 years, instead of 2. In 20 years those 2 companies may be very different from now.

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steve321
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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by steve321 » Sat May 23, 2020 11:58 am

Fortune Seeker wrote:
Sat May 23, 2020 11:29 am
steve321 wrote:
Sat May 23, 2020 5:56 am
With due respect those 2 companies were solid and I did quite well investing in them in this basis :moneybag 8-)
viewtopic.php?f=1&t=258102
If you've invested in them in 2018 and outperformed S&P500 for 2 years that's great for you and congratulations!

EDIT: removed comment about amazon crashing in 2000s, since that was mentioned in that thread you linked.

There is very little chance to guess right what's going to outperform over 20 years, instead of 2. In 20 years those 2 companies may be very different from now.
yeah for the next 20 years I will likely need to look into China. Read an article by Dalio on Linkedin showing that it'll be the next superpower. Harder to pick stocks over there as I'm not at all familiar with the place/culture. We'll see if I have any hunches... :idea:
Success does not bring happiness. In fact, happiness IS success. | 'There are only two tragedies in life: one is not getting what one wants, and the other is getting it.' Oscar Wilde

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Re: Warren Buffett "Most People Shouldn't Pick Individual Stocks"

Post by Fortune Seeker » Sat May 23, 2020 1:47 pm

Well in this case you are expecting to exit out of those 2 positions at some point, right? After you do, come back here and say what you ended up with, it'd be interesting to know.

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